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UK IT spending forecast darkens

Analysts say cuts worse than expected

The report claims that spending for software and IT in the UK will drop by 1.36 per cent in 2009

Spending on software and IT services in the United Kingdom is set to fall
further than expected.

Analysts
Pierre
Audoin Consultants and
TechMarketView
estimated in a recent report that spending for software and IT in the UK will
drop by 1.36 per cent in 2009. The ₤39.5bn annual spending total is lower than
the firm's original estimate of a one per cent decline on the year.

Although analysts forecast spending to be down this year, the long-term
forecast calls for an increase over the next three years, rising to more than
₤45bn by 2012.

"At the beginning of the year we said it was going to get worse before it got
better," said TechMarketView managing partner Anthony Miller.

"While it’s still too early to talk about green shoots of recovery, our
reading of the market indicates that the worst may well be behind us."

Analysts predict that in 2009 IT project spending will be hit the hardest,
declining by 5.5 per cent, while software spending will be down by 3.9 per cent.
However, outsourcing spending is on track to record a 3.1 per cent gain over the
year.

Some of the shorter-term outlook for the industry could be determined in the
public sector. The analysts noted that government accounts for roughly a quarter
of all UK IT spending. As such, the picture could change depending on election
results.

"There may well be a hiatus in kicking off new government IT projects pending
the election," said Miller.

“But whichever colour of party we see in government next year, we expect that
the pace of outsourcing and, dare we say, offshoring, will undoubtedly increase,
more so with the Tories."